Employees of Grameen Bank form a human chain in front of their central office after a court upheld an order removing Nobel laurate Muhammad Yunus as head of the microlending bank he founded, in Dhaka March 8, 2011.

Image Credit: REUTERS/Andrew Biraj

Saving Grameen Bank, Sustaining the Bangladesh Paradox

Increasing state control over Grameen Bank will hardly serve the interests of Bangladesh.

By Niaz Asadullah and Zaki Wahhaj for The Diplomat

December 06, 2014

Bangladesh today is a global poster child within the Muslim world for women’s development. When it comes to gender equality, it ranks above all South Asian countries and Muslim-majority nations in Asia. The Bangladesh gender paradox – superior status of women despite a patriarchal social structure and strong influence of religion – owes to another paradox: Health conditions and economic participation of women have improved over the last twenty years despite limited public investment in social sectors.

At a time when women’s development has been lacking in much of Africa and South Asia, millions of Bangladeshi women are going to work every day as factory workers, primary school teachers, and healthcare providers. This has happened not because of any large scale public investment project. When the boom in women’s participation in export oriented factories started in the mid 1990s, most girls in Bangladesh were barely completing primary school.

Rather, the foundation for women’s development was laid by non-state actors. Bangladesh’s microfinance pioneer Professor Muhammad Yunus saw women as the key agent of social change nearly four decades ago when gender development was yet to be recognized in the country’s development agenda. In later years, NGOs like Grameen Bank and BRAC not only championed development schemes that targeted women, they also employed hundreds of thousands of women at the community levels to deliver health, family planning and education services.

Bangladeshi NGOs have further promoted the status of women by increasing their participation within the organization. While seven out of 20 directors at BRAC are women, Grameen Bank has gone one step forward by employing female borrowers as members of its governing board. In later years, the government built on these transformative measures by adopting a gender sensitive budget and further promoting women in leadership positions in the public sector.

Previously, its more than 8 million rural female borrowers would directly select board members of Grameen Bank through open election among themselves. That power to appoint its own board members has now been taken away from Grameen Bank’s female members, who own a majority of the Bank’s shares, and given to the central bank. Following the new government directive, elections will be overseen by officials from another bank. The government will form a three-member committee to elect nine members of the 12-member board. According to Bangladesh’s largest newspaper the Daily Star, the three-member body will comprise of two deputy managing directors, one from a state-owned commercial bank and another from Palli Karma-Sahayak Foundation.

Women’s participation in NGO programs in Bangladesh, including initiatives in health, education, savings and microcredit, remains strikingly high even today. In a nationwide survey of 8,000 households conducted earlier this year, we found that almost 12 percent of rural women between the ages of 20-39 had joined a new NGO program, predominantly in microcredit, since last year alone.

The Bangladesh paradox, or strides in gender equality in a cultural context that is seen as hostile to women, can be linked to the presence of a vibrant NGO sector that has ensured that poverty and patriarchy will not stand in the way of expanding women’s agency in the country. Beyond teaching women how to save and get access to credit, the NGO-driven microcredit program created a sense of solidarity and improved outside mobility as borrowers formed credit groups and met each other on a regular basis. This helped deliver other important social services such as family planning, and maternal and child health care. Most importantly these actions have facilitated significant changes in norms, attitudes, and practices related to gender equality.

Bangladesh has improved its rank in this year’s Global Gender Gap report, moving from 75 (2013) to 68 (2014). Much of this is owed to the inclusive model of social development that has seen NGOs working side by side with the state for four decades. This has facilitated social innovations in the field of women’s empowerment and gender development. NGOs like Grameen are invaluable in environments where conventional solutions to gender issues (such as poverty reduction and economic growth) alone have failed to deliver. Further progress is possible if the government-NGO partnership is nurtured and left outside politics. On the other hand, the country gains nothing if state control over Grameen Bank is strengthened. It would at best marginalize millions of female borrowers who have quietly fought for gender equality in this economically poor Muslim majority nation.

Niaz Asadullah is Professor of Development Economics and Deputy Director of the Centre for Poverty and Development Studies (CPDS) at the University of Malaya. Zaki Wahhaj is Senior Lecturer in Economics at the University of Kent.